Even though Unicas Cashaa does not claim to be a bank, should the route chosen by Gaurav to offer loans in exchange for cryptocurrency be alarming?
“Since United is a cooperative society and not a bank, RBI does not have any regulatory or supervisory powers in relation to this institution,” NS said. Viswanathan, former RBI Deputy Governor.
“Cooperatives that do not have a banking license provide loans and advances to their members through deposits attracted by their members,” he said. “Here the risk of bankruptcy, unlike banks, is shared by its members, who are not depositors in the sense that they are understood in the case of banks.”
Multi-state cooperative societies are regulated by the Central Registrar of Cooperative Societies in accordance with the Law on Interstate Cooperative Societies.
In addition, the cooperative society is not allowed to issue checks, provide interbank cash withdrawals, issue debit and credit cards payable at any other bank, make foreign currency transactions or use the services of a clearing house, R. Gandhi said. , former deputy governor of RBI.
“This is a (United) credit society, it can lend money to its members for their own purposes, whether it’s buying a car, starting a business or buying cryptocurrency tokens,” he said. “But Unicas affiliates should clearly indicate that it is a cooperative society with several states so that members can use its services with this in mind.”
In accordance with section 56 of the Banking Regulation Law, no cooperative society other than a cooperative bank can use the words “bank”, “banker” or “banking” in its name or in connection with its activities. …
According to Gandhi, a primary credit company must transform into a primary cooperative bank if its paid-in share capital and reserves exceed the 1 lakh threshold under section 56 of the Banking Regulation Act.
But the same rule does not apply to cooperative societies consisting of several states.
“RBI recognizes a loophole and has asked the government to harmonize these rules so that interstate cooperative societies have to transform into banks above a certain threshold to avoid systemic risk,” he said.